Top Ten Profit Rules

If you didn't realize there were rules, you're not alone. At The Adare Group, we've come up with 10 of them. In each of the upcoming issues, we'll examine each rule in-depth. But first, let's find out what the Top Ten Profit Rules 10 rules are and why following them can make or break a company.

These rules are based on leading business theory interpreted into practical common sense. They mainly require is a degree of intestinal fortitude-the courage to buck the status quo.

Profit Rule #1: Solve customer's critical problems

Profit Rule #2: Externally focused - The Outside-In Approach

Profit Rule #3: Make quick, tough decisions

Profit Rule #4: Measure actions that generate profits

Profit Rule #5: Don't let the stock market run your company

Profit Rule #6: Innovate, Invest and Inquire

Profit Rule #7: Highly value customized products and services

Profit Rule #8: Only real profits pay the bills

Profit Rule #9: Don't let processes get in the way of profits

Profit Rule #10: Everyone must produce profits

To learn more about each Profit Rule, click here.

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Profit Rule #1: Solve customer's critical problems

• Customer decides what problems are critical and urgent
• Be the easiest solution to a customer's problem
• Learn how to influence your customer's buying decisions

Profit Rule #2: Be externally focused - The Outside-In Approach

• Analyze trends of external forces affecting your business
• Measure relative power of your customer and supplier base
• Obtain competitor intelligence on traditional and non-traditional rivals
  

Profit Rule #3: Make quick, tough decisions

• Requires data on profit events
• Make critical choices between attractive alternatives
• Don't avoid tough decisions waiting for additional information
  

Profit Rule #4: Measure actions that generate profits

• Measure average profit per transaction, customer, product and employee
• Don't over-measure
• Start with the largest number on your P&L, Balance Sheet and Cash Flow
  
  

Profit Rule #5: Don't let the stock market run your company

• Ignore Wall Street pressure and opinions
• Manage the business, not quarterly earnings
• Talk with customers more than with investment analysis
  

Profit Rule #6: Innovate, Invest and Inquire

• Innovate: Creativity is cheaper in the long run than conformity
• Invest: Risky but generates long term profits
• Inquire: Curiosity produces innovation and reduces risk
  

Profit Rule #7: Highly value customized products and services

• Charge for value
• Commodity products need a lean cost structure to maximize profits
• Customized products and services require customized processes
  

Profit Rule #8: Only real profits pay the bills

• Focus on operating margins vs. net income
• Cash is king
• Always question the numbers
  

Profit Rule #9: Don't let processes get in the way of profits

• Evaluate processes by the profit they produce
• Don't get attached to processes
• Be creative with customer solutions not business practices
  

Profit Rule #10: Everyone must produce profits

• Tie compensation to profits, not stock price
• Set up each position to contribute to profits
• There is no good reason for poor profit results